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Squawk Box

News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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03:01:00

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Channel v58

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mpeg2video

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ac3

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704

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480

TOPIC FREQUENCY

Us 35, S&p 17, U.s. 16, Becky 12, Obama 12, Washington 11, Lisa Myers 10, Nbc 9, Apple 7, Sears 6, Pfizer 6, Usaa 6, Google 6, Bny Mellon 6, Nokia 5, New York 5, Cisco 5, China 5, Lisa 4, Texas 4,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    October 29, 2013
    6:00 - 9:00am EDT  

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nokia and jet blue. and is there a doctor in the house? nbc news reports that the white house knew that millions would lose their plans. you can't keep your plan under obama care. some, anyway. it's tuesday, october 29th, 2013 and "squawk box" begins right now. good mortgage, everybody. i'm becky quick along with joe kernen. andrew ross sorkin is on assignment today. he'll be back tomorrow. on the fed news, ben bernanke will be gathering with other fomc members for a two-day meeting. a policy meeting is set for tomorrow. economists say this is likely to be more of a strategy session with no action from the central bank. the senate banking committee is considering holding a hearing on janet yellen's nomination on december 14th. the panel needs to vet the nomination before it can go to
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the full senate for final consideration. steve liesman reported last week senator rand paul said he was thinking of putting a hold on yellen's nomination unless a voet vote was loud on his proposal for more transparency on the fed. beyond the fed, there are some other economic happenings. namely, at 8:30 eastern time, we have two reports delayed by the government shutdown. first, we go the consumer price index. we also get retail sales. at 9:00, we have the s&p case-shiller home price index. at 10:00, we get business inventories and consumer confidence. as fort corporate news, pfizer, etna, archer daniels, nokia and jet blue. by the way, stocks are coming off a flat session to start this week. the futures this morning, after all of that, you'll see at least right now that the futures are indicated slightly higher. the dow futures up by about 23 points. s&p futures up by about 2.3
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points. and, joe, i'll send it over to you. >> another uptake? eight out of nine for the s&p, i think, and the dow, as well. the fed is very, very influential and powerful. but for whatever reason -- >> we're expecting tapering to continue forever at this point. that may explain -- >> no tapering. >> no tapering. qe to continue. >> it's like a double negative. >> we're not expecting them to not cut ever. >> yeah, yeah. let's watch a couple of stocks this morning. so much at the top. people were worried about margins, but it's all explained away this morning when people who know what they're doing look closely at it. earnings and revenue beat the street. the company's gross margin outlook initially d appointed investors who sold and as i said
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at the top, it was up 25% since the last report. . so it's not a big shock to see profit taking that when the company reports with investors cashing in on recent gains. but we will have more on the report in a couple of minutes. we've got an analyst at this hour and an analyst next hour and we'll go into why the gross margins initially looked like it was a brother forecast. now they're saying it has to do with it's actually better given what the company said they were going to be doing, the gross margin to be able to keep them where they are is even better than where it was. and right. right. >> i don't know. >> this one is, you know, we would have -- if it wasn't for ackman and carl icahn, i don't know if it would be our second story to talk about. you pronounce the h or you don't? >> herbalife, right? >> i don't know.
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it's not herb greenberg, it's herb. >> it's not herb greenberg. this is erb that you're talking about. >> herbalife. >> reported better-than-expected earnings. revenue matched the company's estimates. somehow, i think they're -- it does eventually -- it sold to someone and the people use it, right? i like their candy bars. they sent me some of those. oh, they weren't candy. >> they were protein bars, right? >> yeah. they were good. i ran out of them, though. >> are you looking for more? >> if i had some more, i'd be able to talk more clearly about these results because i'd have more energy. the company boosts -- i like the peanut butter ones, in case anyway was wondering. also boosted its full year forecast and earnings and revenues. missed wall street consensus. the data gave lighter than expected current quarter guidance and that caused the stock to be down.
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anyway, it's -- working on it. working on it. they're collaborating with cgi, the obama care firm, to fix our charts. no, they're not. i'm not going to say anything about that at this point. this whole obama care thing, i'm going back into my microworld of stocks. i get nervous reading about -- >> you can do that for about one more story. >> but i'm reading about some of these individual people that -- this guy liked his policy .now he's getting another one. his doctor network is smaller. his deductible is much larger and his premium increase is 66%. >> right. it says the deductible is less but the plan doesn't meet my needs. >> that's a different guy. >> this is not just a situation of looking and cherry picking and finding examples of people who are unhappy with it. this is a story where more than
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7 million people are losing health care -- do the math. i read two of these, and their stories are bad. and then if you multiply that by 7 million -- >> let me tell you the story briefly and then we'll go through mow in detail on this. if you haven't heard yet, this is news out there from nbc. nbc is reporting that the obama administration knew millions of people could not keep their health insurance. four sources who were deeply involved in the affordable care act tell nbc news that 50% to 75% of the 14 million consumers who buy their insurance individually can expect to receive a cancellation letter or equivalent over the next year. that's because their existing policies don't meet the standards mandated by the new health care law. one number predicts the number could reach as high at 18% for those new people. many will experience the sticker shock. the white house is pushing back
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on this report. a white house press equity is tweeting that the nbc scoop, in parentheses sites normal turnover in the individual insurance market that's a, new new, b, not caused by the aca, and c, the problem aca will solve. lisa myers broke this story and will join us at 7:00 eastern with more. >> that is misleading, the response to it. because they were going to grandfather initially people that were in certain plans and then the rules were tightened by hhs to where the grandfather wouldn't count for anyone who had a change in policy. and they change every rear. >> and by the way, insurance policies change frequently. >> and the men you change it, you're not grandfathered. >> they can change the deductible by $ 00 and your insurance plan would no longer qualify.
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and barack obama, when i was campaigning on this was saying if you like your plan, you can keep it. as late as 2012, the president was saying if you like your plan, you can keep it. they knew a lot of people would get thrown out. but when i listened to him and didn't believe him, i wasn't talking about -- >> you were talking about the math. >> no. i was talking about people that had employer sponsored plans. and it -- and i was saying the reason it's not true is because a lot of on employers are going to decide this isn't worth doing it, i'm going to let -- so i was saying you would lose your current plan because you're -- >> not because it would be indirect and he could get away with saying it. but this was actually you could not keep your plan. >> the 14 million people who individually buy insurance, at least 7 million of them, is what this plan is saying is -- >> but that's the total of the uninsured that they're even trying to get signed up. so with the best case scenario to get 7 million uninsured, you're messing with 7 million
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people that already have plans. >> one of the individuals who was cited in this, we talked about some of the individual stories and, again, obviously, there will be exceptions to every year, but you're talking about exception toes a scale of 7 million people or more. george swabb said he was perfectly happy with his plan from blue cross blue shield. it insured his wife for a $228 monthly premium, but the comparable payment plan that he's now being offered costs $1208 a month. it has a $5500 dedoubleble. and he says i'm sitting here thinking we ought to pay the fine and wait to get insurance until we're sick. that's the huge problem. if you have people not signing up for these plans, they're waiting until they're sick because you can't be turned away for a pre-existing condition at this point. and it includes drugs. >> right. if the penalty is only $99 a year, you would just pay the $99 other than the $12,000 that it
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would cost you extra for this man. >> and at this point, i guess these are letters going out, but people trying to sign up, we don't -- because of the glitches, we're not sure how widespread all this is going to be. >> well, another problem is, these 14 million people or 7 million or however many million, they don't have coverage come january 1st. and one woman who has a six-month-old baby who is cited in this story says, look, i have a 6-month-old. i don't have hours and hours to spend on a website that's not working and come january 1st she won't have coverage. even they she may not have to pay the fee, the fine until march 31, she's fought going to have coverage come january 1st. >> wow. we haven't even talked about all the spy stuff. i don't want to wimp out on all the spy stuff and we are going to wimp out, the liekts like. we're going to see the headline in the "new york times" we're thinking about obama may ban spying on heads of allied
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states. so each peter king said yesterday, don't wimp out, mr. president. we're on a need to know basis. >> it's created some huge diplomatic headaches. >> the second term is not proceeding according to planned, is it? >> they rarely do. ross westgate is standing by in london. good morning. >> good morning, becky. we're trying to tick higher. advancers outpacing decliners here by around about six to three on the dow jones stoxx 600. we have green on the board, as well, for these indices. got a problem with the camera there. let's show you where we stand with the ftse 600. currently up 0.4%. we're already focused in on earnings. the ftse mib up 1.3%.
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the cac 40 and the xetra dax up about 0.1% specifically. the best performing stock today in europe is the oil made just third quarter earnings surprising analyst expect ages. we saw an underlying profit of 26% and thought it would come down 37%. they're also returning more money to shareholders by ways of increasing its quarterly dividend by 5%, 6%. they have a divestment program as well as 10 billion. and bob dudley, the ceo, said we want to get more of that back to shareholders, too. >> the shareholders have been very, very patient with bp. i think it's time for us to do not only keep a progressive dividend policy and we will continue to review it. in addition, we announced today we would sell another $10 billion of assets between now and 2016 and made those available for additional share buyback. >> bob dudley speaking to us on cnbc a little earlier. what's interesting is that bp's provisions, they increased by 39
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million. analysts were expecting an increase of 42 billion. the reason they haven't is because of recent claims. they recently said there have been claims made and you've lost no money at all. so bp is saying we're not going to provision the claims that have not been approved but paid out to just know whether, in fact, we will end up paying them out depending on what the court reelgs are. banks very much in focus today, as well. the number of earnings out today, lloyd's today, a rise in the first nine months of the career, but it set aside an opportunity, 7.50 million pounds for ppi insurance. standard chartered, the asian focused bank down 1.17% today. low, single digit growth in both the revenue and operating cost in the third quarter. also hit by all the fed taper talk, as well, in emerging markets. deutsche bank posted a 98% drop in quarterly pretax profit. the german lender hit by 1.2 billion increase in litigation
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provisions. third quarter werings beat forecasts. but the bank warned of litigation continuing into next year. as a result, they're going to defer their aim to achieve a return of equity of 15% by 2015. they're deferring that by a year. and the c said look, we want to try and be more transparent. we have been quite up front by our litigation issue in our litigation report and our language. we continue to expect litigation charges for the industry and for us. >> and a swiss regulator wants
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them to hold more add on. that's really not to investors, they didn't expect -- in fact, the management said we didn't expect it. so huge regulatory risks, as well, to be still for they banks. the stock is down 6% today. that's where we stand here in europe. back to you, joe, becky. >> all right, ross. thank you. when you make phone calls, are you nervous now? do you think we're lisping? because we are. i guess your people over there, you guys tap everything, don't you? >> i'm assuming -- we have a big place outs dchq, which is a huge listening -- like your nsa, a huge listening -- i'm assuming, as i pay my taxes, that they're listening to everybody. >> yes, i hope so. and who is that lady that --
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>> what they're not doing, i'm assuming, is taking notes. i think where we went wrong with the u.s. administration, joe, they wrote it down that they were listen to go angela merkel. >> that's what happens. who's that lady that tells daniel craig what to do? >> m. >> she knows, right? >> yes. i'm just trying to get this straight. the germans, they're rich. the germany at this point is -- it reminds me of cas casablanca. germany has not earned its spying outrage with all of their arms dealings and all the -- anyway, we get involved in everything over here, ross. >> there was a report yesterday, annette talked about it out of frankfurt. there was one report in the german press that said it may -- because of hangovers from the laws post the war, it may not be
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illegal for the u.s. to spy on the -- to listen in on the german fwoft. so there is some debate about whether the u.s. has broken any german law whatsoever. >> right. anytime you guys want you to stop funding nato and protecting your entire continent, you just let us know if you don't like the way things are going in terms of our subsidizing your security. >> you got caught. you can't write these things down. >> that's the crime. all right. thank you. thank you, ross. >> just be careful. i don't know what you -- you know, i read one of your conversations and i'm not sure what you were talking about in this, but it was a little dicey, ross. apple reporting quarterly results better than wall street. but investors initially weren't impressed. brian white is the head of
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global -- is that it? halloween is right around the corner. >> profits like -- >> could you turn me into a mouse with me just sitting right here right somehow. >> please do. >> not going to do it on set. >> so i just read that last week when apple said it was going to start giving away some software, that that's what changed the growth margin outlook that people initially looked at that looked lower when, in fact, it was better if you include what they said last week. is that what you're saying? >> exactly. >> they had 150 basis points to close margins. so if you look at the new -- it yoox to be 1999 and they gave away from ios software, as well. that impacts margins. >> so margins peaked at 47. then you've got a couple of quarters that were at 37. because there's now samsung and competition. but now by staying flat, that means that they're stemming the
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decline in margines and people should have probably not mroeted the stock on it. >> the stock was down 15 bucks until the margin comments were made and it reverts up. >> so the people figured out what was happening. okay. number two, is it a momentum stock now or a value stock? and the reason i ask this is if you have street straight quarters of declining profitability, declining earnlings, then you buy it not for momentum, do you? we buy it because it's versus its peers. >> the way i look at apple is it really has growth characteristics but it's a value stock. so think about it trading 2001. >> okay. >> this is our favorite stock and it trades, s&p is at 14 1/2. the multiple of apple versus s&p since 2007 has contracted 60%. it's amazing. >> it's a multiple of apple relative to the s&p contracted 60% since when?
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>> that's growth rate since 2007. if the growth rate in that time is over 50 and the s&p has been about 5. >> what is the waz complaining about? did you read that? >> what should i be -- is there anything that i should be unhappy about with that? should i worry that they're going to be able to -- that everybody is such an attractive marketplace that everybody is shooting for him now? is there anything to worry about? >> i think the stock is ready for liftoff. and the reason being, the profit cycle has bottomed in the june quarter. second thing is entering a year of growth. so if you look at cps in fiscal '13 declines, we're going to grow in fiscal '14. you have a lot of new products coming out, right? ipad a is the biggest upgrade since the original ipad. it's a big deal. it only weighs a pound. 20% thinner. i think that's going to cause a massive, massive upgrade.
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it's a significant backlog. but, you happen, there's other innovations out there that, you know, haven't been announced and we think in 2014, you know, we're going to see new product categories and that's exciting. >> okay. i'm not even going to -- the company did not address any activist investors who shall remain nameless. they didn't even address -- i don't think i'm going to driveway it because i'm going to try to do my part to lower the network's coverage of that. >> i do have a question. does icahn -- >> you just said it! but the 25% run up, i wanted to ask this, do you think it's due to carl icahn or do you think it's due to people looking at the fundamental story of apple? >> i think it's definitely helped. i don't think it's the whole story. what we've seen is massive cash distribution starting with the announcement in april. then we saw the profit cycle bottoming out.
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carl icahn getting involved if is definitely a part of it. they didn't directly get involved. >> appear sxl herbalife. he wants to be like miley cyrus. the more you're talking about him, the more he likes it. if he twerks, that's where i draw the line. >> i don't want to see anybody twerking. >> did you see that someone went -- like a famous person went somewhere dressed in their halloween costume as miley cyrus. it was yesterday. it was a famous actress and her halloween costume was -- >> it's probably one of the most popular halloween costumes. >> miley cyrus? >> it's the wrecking ball out. >> she would probably think she's the biggest star. she's probably not lying.
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i don't like the way things work any more. you with your outfit, you're trying to make a splash here, too. >> the profit cycle has bottomed. we're at black. >> you can turn him into a frog after we go to break here. >> a frog, a mouse. thank you. when we come back, a mystery barge that's floating in the san francisco bay and the possible connection to google. first, we have a squawk sports news story for you. red sox beat the cardinals 3-1 last night in st. louis. boston now has a 3-2 lead in the world series. it can wrap up its third title in ten seasons as early as tomorrow night. right now as we head to a break, the weather channel's alex wallace joins us with the national forecast. alex. good morning to you. we're tracking this system in the middle of the country right now bringing some rain .some snow to the northern tier of the country. you can see that moving through the dakotas into minnesota. activity with steadier rain back down towards kansas city making the morning commute tougher. it's all thanks to this system
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moving its way eastbound with moisture flowing northward here. that's going to aim in the development of showers and storms. heavier rain out there, as well. look at the bull's eye, 3 to 5 inches to the north. sliding up north towards kansas city. and there's also the potential for severe weather, as well, today. from the panhandle of texas, working into oklahoma, we can see damaging winds and hail, that will be a risk. and then in the northeast, late in the week, that system will be approaching from the west and we'll see our rain chances creep up for thursday into friday. that's your national forecast. more "squawk box" coming up next. bny mellon combines investment management & investment servicing,
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giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.
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time now for the executive edge. the first story this morning, google is being tied to a mysterious barge in the san francisco bay. cnet reports the search giant is almost certainly building a massive structure in plain sight, but behind tight security. it could be a floating data center because google has a patent for a water-based data center. meantime wab local tv afillant in san francisco is reporting that google is reporting a floating market center for google glass. a lot of mystery around this and people always like mystery peps. >> it's crowded, san francisco. it would be hard to -- you'd have to go way outside the city, probably.
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anything google does is high tech. they hired ray curstwile to cure death, right? they are doing a lot of school stuff. >> marketing or data center? a marketing center, if you want to create a splash, the way to do it would be to create it out in the middle -- >> quite a pun. >> i didn't think of that. >> a market would be different than a marketing center. >> i think marketing is what -- that's what i had read. a marketing center. >> so neither one of these, if they're just -- if it's security that there is a lot of security, but it probably just sounds like they might want a facility. they had the technology to do it and it's no -- it doesn't mean that it's like a really -- that they're doing evil things. >> but it's interesting. it's a mystery. >> we look at everything because they don't want to do anything evil, but then we think they might be doing evil. >> you know why they've stopped
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building it? >> why? >> because they didn't have the permits. that's according to one of these reports. >> aren't they essential for all the nsa stuff, too? they've got their tentacles everywhere. >> i don't think that they're -- >> they're part of the whole -- google is so powerful. >> i don't think that they're -- >> but there are a lot of tech firms that are -- that's government had to -- >> but i think the item tech firms have been upset because they -- >> i can't tell you that. but also, when we spoke with mark andriesen, he was like, look, if you knew what was going on, you probably wouldn't be as concern, right? i don't know everything that's been attributed to what these companies are -- i don't think they're doing. >> is google the glasses? >> yeah. those are glasses. >> they don't want people spying on their technology. you would have to, like, row out there to look at their -- >> i think they did exactly what they wanted to do.
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they got all the free yank and -- >> i don't get to read a story because we're finished? >> yeah, because you talked to long. i like your other story, too. >> which one? >> the story you were going to read. >> about facebook doesn't work or about gold? >> gold is the story i liked. >> the central banks are starting to sell it. in the meantime, it is time for a break. when we come back, we'll talk about markets, the start of the two-day fed meeting and much more. ♪
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help the gulf recover and learn from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger. welcome back, everybody. the market closing at another high. the dow could rise upwards of
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10% in 2014. is this a time to stay bullish? joining us right now is jason bersen. rich steinberg, global asset management president and chief investment officer and, david, why don't we start with you? do you think this is a good time to be staying bullish, particularly if it's because of what the fed is doing? >> well, i certainly don't think the fed will be changing policy anytime soon. they've said it's going to be any decision they make will be data dependant and the economic data will probably be relatively week in part because of the government shutdown for a while. >> when do you think they actually do begin tapering? is it march or even later? >> they don't even know. it's going to depend on when the data comes back. i think march is the earliest, but it could well be later. >> once the tapering begins, do you think it's going to be a gradual thing or, you know, at this point the market is betting we won't hearing any news for quite some time.
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>> i think it's quite likely it will be a modest tapering. and it may not be until the end of the year, maybe not until 2015. >> rich, how about you? we have another situation where washington is going to be weighing in again in january or february. does that concern you? or do you think this time will be easier? >> i think it's going to be easier. unfortunately i have the greed deem yun on one shoulder and the fear monger on the other going through the issues that you and david are talking about. that's whether or not, a, earnings coming through for next year and what multiple people are willing to pay. we had a $1700 target for this
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year and i think we're probably too low. yesterday i'm afraid to put money to work right now until we see what happens in washington, buckeye. >> the economic news has been weak. washington has been a bit ooh a mess. but earnings season has been coming in pretty strongly, rich. >> 70% of companies that have reported so far have beaten estimates, which is pretty mormal. about 67% of those have already talked down their fourth quarter. and we need to keep that in perspective. earnings right now for next year are $121 is for the s&p, which is up from $1110. that is a big move in a weak economy. >> we keep talking about tapering so much. >> i'm blaming you.
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>>. >> i have a quick question about christmas. not you, to you, david. i'm over here. are you looking at me? >> i'm looking right at you. >> i thought you were looking behind me. this obama care stuff, if you're paying 200 and all of a sudden you're going to be paying $1,000, is it enough people to where you say i'm cutting back on christmas or would the sequester cut back on christmas or would the shutdown or does it wealth affect for the stock market and the housing situation being better, does that offset that? >> i think it will be a modest christmas at best. they probably will be successful. >> how could that affect the normal person? the normal person shopping for the family at christmas isn't thinking about whether congress has another argument, are they? >> you know, if we have a debt default, and that's going to be all in the news in disease. >> if you work for a defense
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company, you might be -- right. well, wa about obama? you don't think the sticker shock will affect? >> it will affect who it's going to affect. most people aren't affected. we have over 300 million people in the cup, so it's not most people. >> we were looking at gas prices. gas prices coming down, oil prices coming down, maybe that's offset some? >> those are positive things. the wealth effect is positive, as well. but we've had modest economic news. why is that going to change? i think christmas will be okay, but not great. >> rich, quick last work. your price target for next year? >> it was 1780. but i think we may get to a 16 multiple and we may be at 1850 or so on the suspect. i have to re-evaluate, to be honest with you. >> that's a christmas present.
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1850, whoa. >> rich, thank you for joining us. david, thanks for coming in. >> happy to be here. coming up, steak and eggs and a taste of the american consumer, which we were just talking about. we'll talk to the ceo, the president of the texas road house. but first, a couple of stocks to watch. etna reporting mixed results. in fact, earnings were 3 cents short of estimates. but revenue was above and we got some news on sears. the company is considering separating two of its -- land's end and the sears auto center. the two could optimize their capital structures and pursue their own strategic options as independent operations. sears says a lands end separation would likely not be separated as a sale, but as a transaction that would allow existing shareholders -- they built their entire strategy around land's end.
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did you see any salespeople? >> yep. >> hello, hello, hello. the benefit. okay. still evaluating a strategy for sears another center. and the same announcement, a lot of news on sears. reporting 3.7% decline in comp sales for the 12 weeks ending october 26th. (vo) you are a business pro.
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joaning us is scott calosi, president of texas road house. any in new jersey? there's some in queens i see.
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you need to add one, i think. do you know yet, scott sfp. >> well, good morning. we are actually in old bridge, new jersey, which is northern new jersey not too far from you guys. >> you've got a lot of opportunity still. what, you got 300 locations in how many states? 40 states? >> well, we're just over 400 stores now in 48 states. >> 48? >> 48 states and we're actually going to get up to alaska, which will be our 49th state early next year. >> where are you -- so you're only missing two states, then. but you're not in -- within driving distance of everyone. so i can get steak. what's different about this steak or some outback or some other steakhouse? there used to be lone -- i forget. there were some other ones. why would i go to your shop? >> legendary food and legendary service is our mission statement. the legendary food is the first part of that. that begin wes our steaks.
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we hand cut all of our steaks every day in our restaurants. we use a great quality product. and we also both sear and grill our steaks. the seasonings we use our our steaks is all part of the differentiation we have versus outback and other players in the industry. >> actually, i was looking at your website. i think maybe it needs to be updated. i don't know if they got all these locations or not. you've got that obama care issue, people working on your website maybe. i'm not sure. tell me about the latest report. the same-store sales continue to grow pretty nicely. >> yeah. we've got a lot of momentum in sales and it leads us to be confidence in the things we're working on are the right things from the guest perspective. the folks running our restaurants are doing an outstanding job in executing the mission of legendary food and legendary service each and every day. so for a long time, we've had a lot of momentum in our sales and we're building a lot of stores,
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25 to 30 restaurants next year. we're also continuing to grow internationally. we had a few more stores coming up in the middle east. next year, as well. same size of legendary food and legendary service missions, international, as well. so we're very, very confident in the direction of our business. >> you know, i've seen all these -- have you seen these web people? they make money. you get immediate feedback on a place. i might go public, becky, because i'm hearing from viewers, texas road house from this guy, you need to try it, far better than outback or lone star. so i'm getting critiques as i'm sitting here with you, scott. do you agree with this guy? >> we're very, very proud of the food. i think most people would be impressed if they understand how much work goes into our food each day. all of our recipes are from scratch. we even make crew tons from scratch.
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>> really. >> it's a very impressive production. >> where is the consumer right now in your -- we were trying to figure out, gas prices have come down, that's good. other things, there are some headwinds, as well. is it a five or a six on a scale of 1 to 10? >> i think that's pretty accurate. certainly we've seen since 2008, 2009, you know, a slow but steady improvement in unemployment, a slow but steady improvement in the consumer confidence index. and so, you know, for us, that's a little bit of a tailwind when you've got unemployment improving and customer confidence improving. so, you know, those things continue. again, we'll feel very strong about our business. the biggest thing we worry about, quite frankly, is the strength of the economy and unemployment, specifically. >> i want to check it out. that might be too far. you've got some texas red chili, too. i clicked on a dessert thing here. what would i get? what's the best? i'm planning out my menu if i
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come. >> we're not too big into dessert, actually. >> the main part of your meal is where you're going to get full, right? >> that's right. get that loaded sweet potato. that's a little bit of potato and the dessert at the same time. >> rattlesnake bites. yumm. not real rattlesnake. taste like chicken. no, just kidding. i like in the summit/millburn area of new jersey. >> very welcome. nice talking to you this morning. >> just thinking of some places -- >> we're on it. >> route 10, route 22. thanks. we are talking health care this morning and the problems with rollout. up next, we'll take a look at how venture capitalists say they can help the process .make money, too. "squawk box" will be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities.
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two of the nation's fastest growing health care i.t. firms announcing a partnership this morning with the goal to address some key operational issues that doctors face under the health care reform laws. the cloud care's chairman and ceo and albert, let's talk first of all about the problem you two are trying to address by bringing this together. there was a recent survey with 5,000 u.s. physicians who said 48% of them said they lacked the resources to accept new patients
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created under the aca. what can you do to help them? >> yeah, that survey was conducted by my company care cloud. and to be honest, i was alarmed when i saw the results of that. half of those physicians, half, 2,500 said they were completely unprepared to receive new patients under the affordable care act. so there's really no better representation of how care cloud brings solution to the market by replatforming health care. the partnership -- access to consumers to doctors apointments. >> if there's -- if there's an appointment that opens up, they can let people kind of see those on an as needed day-by-day basis. >> that's right. care cloud systems are the scheduling systems in the office. the systems open up that schedule to allow better access to care for patients. >> why did the doctors say they were unprepared? what was it they thought would keep them from accepting new
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patients? >> doctors are struggling. they're struggle with reimbursement, the complexity of the industry. it's really hard for doctors to stay current with all of the legislation and requirements of the meaningful use stuff. . and then the icd-10 stuff. and it's hard to run a small business. >> i guess that's why we've seen a lot of doctors in recent years who have been consolidating. >> absolutely. 6, 10, or 20 or more physicians coming into groups because you have a front office that can take care of a lot of that stuff? >> yeah, they get together and leverage better economies across the practices. >> in theory, it sounds like a great idea. but it's going to require some upfront work from the physicians if they don't already have this set up on their screens? >> but that's where we come in, right. care cloud is all about taking all that complexity away from the physicians, allowing them to practice medicine. we've built the system as a platform. it's really easy as opposed to a lot of our competitors who are
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more close systems, it's easy to wire in. doctors don't have to worry about that much at all. >> how many doctors do you have right now? >> we're at about 4,000 docs and growing quickly. the largest fastest growing health care i.t. company around. we're in all 50 states, becky. >> wow. it sounds like a good idea for doctors to have somebody else running some of the front-end operations. >> yes, yes, absolutely. it's a very complex industry. probably as complex as it gets. >> okay. well, we want to thank you very much for coming in and joining us today. >> thank you for having me. >> appreciate your time. coming up, quarterly results from pfizer. plus, nbc's lisa myers with more on her investigation which found that the obama administration knew that millions would not be able to keep their health insurance. ♪
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signals from the fed. markets will be listening for taper talk as the fomc gets ready to kick off a two-day meeting. the latest results from the cnbc fed survey are out and we have the data. obama care under fire. a report by nbc news says that the obama administration knew that millions of americans could not keep their health insurance as far back as 2010. we hear from congressman chris van hollen on this issue. >> and we look past halloween and get a holiday shopping update from the ceo of walmart u.s. as the second hour of "squawk box" begins right now.
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good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan. andrew is on assignment today. in studio with us this morning sharing his thoughts on the market and more, david darst. we'll hear from him in a moment. the futures this morning have been indicated slightly higher. the dow futures up by about 20 points, s&p by two points, and this is coming after the s&p hit another record high yesterday, up eight out of the last nine sessions. take a look at some of our other headlines today. fed policy makers begin a two-day meeting today. it's widely expected there'll be no change to the fed's bond buying program. that's largely because of the expected economic effects of the
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government shutdown. things are going to be a mess for a while, these numbers aren't going to be clear for a while. it's quite a contrast from the last fed meeting when many expected a taper would begin and didn't. nbc news reports that despite what the white house has been saying, the administration knew that millions of americans would not be able to keep their current plans under the affordable care law. the law enforces standards for insurers that many existing policies don't meet. and those consumers will have to buy new ones. the white house says that those numbers reflect normal turnover in the insurance market not caused by the law. but nbc's lisa myers that broke the story will be joining us a little bit later this hour. also, bp beating analyst estimates, also raised the quarterly dividend by 5.6% and announced plans to sell $10 billion in assets over the next two years, anticipates returning money to shareholders, as well. and bp shares higher this morning after the earnings and dividend news. >> and pfizer, the stock has slowly, steadily sickeningly
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made its way back to $30 a share. and the company is reporting results that are being received right now sort of, okay. the company is reported 58 cents, the estimate 68 cents a share for the year. the company says 215 to 220 is where it is forecasting its results versus a 217 estimate. pfizer has been dealing with the lipitor patent expiration for years, obviously, because that's the biggest drug in the world. and at this point, the lipitor revenue down to 533 million it used to be billions of dollars a year obviously. i'm also looking for the revenue number which makes a difference here. do you see that? >> just looking through the release right now. >> yeah, we've got to actually go into the release. they haven't flashed the revenue number.
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>> 12.64? >> the estimate was 12.69. so that's pretty close. the yield on the stock is now 3%. and as i said it in the financial crisis got back down to about $12 a share in the multi-year high going back to the late '99 when it was one of the new nifty fifty. was it at 60? >> 2.7 times book right now. so the stock at 3.1 yield is nice. this guy ian reid is cleaning house. i think you can. 59 billion is the annual sales. 59 billion. they had the largest write-down in corporate history before the aol time warner write-down, $300 billion was the warner lambert pharmaceuticals. remember when they bought warner lambert? and that was a big write-down years ago. >> you have david darst.
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oh, let's bring on david of morgan stanley. orange tie for halloween. >> i like your orange tie. >> i wasn't thinking about it for halloween, but i'm glad i did. >> i was. >> this is not a pumpkin. this is something else. >> a decorated tiny miniature gourd. >> it's a miniature gourd. >> that's right. we thought it would dress up the set here on halloween week. >> you know, you have -- mine has a little dog on it. i can't tell whether that's -- >> it's a friendly canine. >> is that the front of the dog or the back of the dog? do you? huh? why would you give me the back? >> it's a friendly canine. >> can i name this? >> that is a very frisky, friendly dog. >> i want to name this al gourd. do you think that's a good name? >> i think it's a phenomenal name. >> really? well, i'm going to put my gourd in a lock box. anyway, so you would buy pfizer here? >> i think you could buy pfizer here. and i think you're going to see with all of these tech stocks.
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you see the social messaging services. you see these internet retailers, advertising, online -- you saw the article in the journal yesterday, becky and joe that showed four companies, two of them are going public with no earnings and two are going public with no sales, joe. and this is harkening back to frothier times. >> really? >> we think they'll get frothier, mind you. this party started at 6:00 and it's going to end at midnight and it's probably 10:00. it will get wilder -- >> what time? >> at night. 6:00 in the evening. >> let's do -- >> half way through the -- th this -- >> world series. it's world series. what inning is it? >> you've got -- it's world series, sixth inning. we haven't had the seventh inning stretch yet. it's sixth inning. it will get a little bit more frothy. >> 1,800 on the s&p? >> adam parker's estimate for next year. >> adam parker.
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you still -- seriously? >> i'm quoting our u.s. equity strategist. >> he's been bearish for four years. >> he capitulated -- >> who cares? who cares? >> you know, let me tell you, he's looking for $118. >> look, i don't want to hear what he's looking for. >> fine, okay, i'm giving you our u.s. equity -- >> why was he bearish three years ago? >> margins he thought were excessive. they've stayed high as companies have made due. >> markets up 50% from where he was bearish. >> that's right. >> and you're still paying him for his analysis? >> he does good statistical work, sector work. he's good for sectors. you've got to know what the person is good for. it's like an art expert. he's good for certain periods, renaissance art, okay, and you use him for that. you don't use him for the whole thing. and listen -- >> i stopped listening. anyway. all right.
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so as far as the earnings season, what have you thought? >> i have been unimpressed with the revenues. okay, the revenue beats as you know have been something like 54%, the average long-term for the beats is 61%. and let me tell you, revenues this year are supposed to grow 2%, can you believe that? the market's up so much, 24% that with revenue growth this year for the united states, s&p 500, only 2%. last year, it was 4%. half the revenue growth. they're squeezing more and more out of what they have. existing workers. >> it ties back to what the fed has been concerned about. about inflation being lower than they would like on their targets. if you start worrying about a deflationary environment, revenue would be one of the places you would see that. >> our friend mr. bernanke, his whole academic history and career has been built on as you know deflation in the u.s. and in japan. >> yeah. >> and what you had there was ha
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supply-induced deflation morphing into a demand shortfall deflation. supply induced is where you have asia, where you have technology, where you have globalization causing the decline in prices. it's similar to the united states from 1871 to 1896. 25 years, the prices declined in the united states by 1.5% per year. that is a good kind of deflation. there's pernicious deflation, which is when you have demand shortfall. and a couple goes into a department store and say let's buy a refrigerator, one spouse says let's wait, they go back a year later it's 10% cheaper and they say let's wait again. that's the kind that janet yellen, ben bernanke are worried about. >> you're going with -- >> bernanke. >> you're with the bernanke pronouncer. >> as a southerner, as a tennessee boy and he's a south carolina boy. >> is that -- >> you know his middle name ben s. bernanke.
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his middle name is shelome, means peace. >> it's okay to call him bernanke, you don't think it's wrong. you think bernanke -- because we have guys in chicago who say ber-nak-kee. >> we drive to florida and people say y'all need -- >> how much of the move from, you know, to these new highs in the s&p. how much of it is what you were talking about and how much of it is qe? >> qe is -- >> is responsible -- >> the government shutdown. >> how much of the move up is qe? is $85 billion a month and sort of an -- you know -- >> 2/3 to 3/4. >> it's not warranted. >> that's correct. this party is artificial. this party is -- i hate to call it a harry potter market. this is a -- this is a dream world market in which it's not
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revenue growth. >> could have been right about all of this except for the fed has -- >> trumped all of that. trumped all of that. >> i remember what adam was saying now. adam was saying that profit margins had peaked. and when profit margins peaked in the past with companies, a lot of times that's time to get negative. unfortunately, you needed to put all of your eggs on the fed. and don't fight the fed, took over everything. >> the market sometimes follows profits and sometimes it doesn't follow profits, that's what you've got to always remember. sometimes it works, it's like -- it's like catch 22. now, there was an article in the "wall street journal" last week, 90 million americans not working. and this to me is the great tragedy. there's 144 million americans working, 90 million people above 16 years of age are basically have left the labor force. retired -- >> did you say there's more people receiving some type of government help than full-time employees? >> yeah 144 million and higher number than that receiving
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government assistance. >> yeah. >> disability benefits, food stamps. >> it wasn't social security, they're talking about stuff that's been growing. >> this is not critical. these people want to be productive. >> they do, i know. we want to go back to a country of achieving, not receiving. the best entitlement program is a job. i've got these new expressions. >> i love this. >> isn't the best entitlement program a job? >> corporate executives sitting on 1.7 trillion of cash. >> i know. >> they could bring it back here. microsoft bought skype last year for $8 billion as a secret way to bring money back here. >> i know. >> and it's crazy. >> they paid for it with overseas cash. it's a tremendous tragedy that companies are not hiring and building out there, building out their labor force. >> walking away from me and i don't appreciate it. i don't know -- >> i'll get a leash. >> come back! come here, boy. al gourd. all right.
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let's talk about apple, the company did beat estimates on the top and bottom line selling nearly 34 million iphones for the quarter. let's get more reaction to the results. joining us is chris casso. chris, you were happy with what you heard last night from apple. there were some initial concerns and initial selloff. what did you see you liked? >> well, the numbers were good for the reported quarter. they beat on both the top line and margins for the september quarter which they'd already preannounced. it was above the top end of that range. the guidance for the revenue guidance for the december quarter was also ahead of analysts estimates. the one concern that came out immediately after the report was the gross margin guidance for december. which was a little below where the street had them for december. what they clarified on the call was that there was an accounting change embedded in that guidance. the margin guidance good, as well. >> what do you expect for the holiday season? this is going to be a key? joe brought up some of the
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concerns if consumers aren't feeling confident, maybe they pull in a little bit and don't spend quite as much this holiday season. what do you expect to see with apple? >> right. one of the things apple has going for it going into the holidays, their flagship product, the 5s is pretty well sold out right now. healthy backlog and they talked about that on the call. really all they need is the trends to continue. and so far, it's pretty good. they also have a new ipad lineup coming out. and, you know, obviously we'll have to see how that goes. i think they're in pretty good shape. >> you rereiterated your positive rating and your price target of $625. how do you get there? lo and really forward now, and upgrade the stock about a month ago after the details came through from the 5s. and i was worried that wasn't going to be received well by
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consumers and looks like it has. when i look into next year, there's a bigger product cycle for next year's iphone 6. and the hole in the lineup is the screen size. they don't have a larger screen size phone. i think you get that next year and i think that's what moves apple to the next level. >> what about china mobile? >> right. that's something -- they don't talk about that on the call because it hasn't happened yet. i believe that the production in the supply chain gets started right about now. and that right now is the largest carrier that -- in the world that doesn't have the iphone right now. china's new year's is the big holiday over there and that provides a good catalyst and helps offset some of the seasonality, as well. >> chris, the stock by any metric is still cheap. but when you're doing 55 billion, this is apple that five years ago that if you told someone they do 55 billion revenues in a quarter.
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it's like -- i think people are just worried that no company can sustain this incredible performance. so that's the disconnect between trading at, you know, 60% of the multiple of everyone else. is there something looming where they just get eaten up by other people innovate and it's like they're on a treadmill and got to keep running faster and faster? >> i mean, this is technology. so things change very quickly. you look out a couple years into the future, who knows. >> at least what you can say now, it was a valid concern about the android marketplace was catching up to them. but, what -- i think what they showed this year when you contrast to what happened with the iphone 5s against samsung's flagship phone, the galaxy s4, that didn't sell as well as they thought. at least for right now, you know, the eco system is very strong and they have the momentum. looks good for now. a couple years into the future, it's always hard to tell.
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>> chris. >> no. >> thank you for joining us today. >> thank you. and coming up, nbc, our sister network is reporting that the obama administration knew that millions of people would not be able to keep their health insurance. nbc's lisa myers joins us next with this story. god bless her, what a scoop. and the fed ready to begin a two-day fomc meeting. what can we expect? answers from cnbc's exclusive fed survey next.
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nbc is reporting that the obama administration knew that millions would not be able to keep their health insurance as the affordable care act took hold. lisa myers broke the story last night and joins us now with more. and you even, lisa, you probably. got it from two sources. and you had four really -- i would do that, by the way, in this case. great work. >> thank you. joe, basically so we don't scare a lot of people. the 80% of people who get their insurance through their employers or through medicaid or medicare are largely not significantly impacted by this law. what my story is talking about
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is the 14 million people who get their policies through individual insurance. they are the ones who have been getting these letters that either cancel their policies or say, look, your policy doesn't meet the requirements of the new law and therefore we have to substitute a better policy with more benefits and often a higher price. so these two groups of people are finding they cannot keep their insurance even if they like it which is what the president promised. we tried to get a sense of how large a scope that was. and i went back to our investigative team. went back to these regulations that were issued back in 2010 which went to the issue of grandfathering, which is what this comes down to. and it indicates that simply because of the churn that tends to take place in the individual market that they already knew that 40% to 67% of folks in that market were not going to be able to meet the rules for
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grandfathering. so they knew that a substantial part of the individual market could not meet the test they were laying out for being able to keep the insurance if they wanted it. now, so it's basically a marketing problem. if the president had said most of you, the vast majority of you will be able to keep your insurance if you want it, he'd be fine, but he's been saying you can keep your insurance if you like it no matter what, period. >> but, lisa, in the point we made earlier was that when i listen to the president say that, what i was worried about was all the private -- was all the employer sponsored plans that as time goes by will become obsolete or employers will decide i'm going to farm this out to obama care. so i thought it was disenjdisin
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that's not taking into account your employer might end the plan there. and that will change -- this is a whole new area that we -- i mean, i can add these millions on to these other millions and i don't know. i know there's sometimes we don't want to overstate a story, but this is -- this is significant. and we weren't we trying to sign up 7 million uninsured. wasn't that the total we were trying to? that's the goal, right? 7 million uninsured? >> oh, no, i think the number of uninsured that this was supposed to add. trying to sign up through the exchanges, that number initially. >> right. initially. >> this law is supposed to provide health insurance too. i think it's up to 30 million people. >> all of these people are disrupted. this is a bigger number than the people trying to sign up in the first phase, right? >> well, we don't know the absolute numbers. the experts i spoke with extrapolated that they -- their best estimate is that 50% to 75% of those in the individual
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market will not be able to keep the policies they have either because it's canceled or because it doesn't meet the test under obama care and therefore they have to buy a richer policy. that's the best estimate we will be able to find. but this is going to happen over a period of months. it's not going to happen right away. it's going to be as people's policies become due, they will get these notices. and one of the things we found in talking to people is that even people who were very much for obama care and believe it has really good elements to it, especially the protection on pre-existing conditions and employer, insurance company not being able to drop you, they were shocked that they were getting these notices. >> lisa -- go ahead, sorry. >> no, go ahead. >> one of the things i've heard from people reaching out today is, well, these cancellations are because the health care didn't provide basic coverage, didn't provide decent coverage. and i guess, can you tell us a
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little bit more about what's required? it was my understanding if it didn't offer prenatal and maternity care, you would be canceled, is that correct? >> well, yes. one of the issues the obama care requires that you provide a package of like ten basic benefits that includes maternity care, mental health care, a number of things that a lot of folks don't have in their policies. and it's absolutely true what the administration says that a lot of people in the individual market have tried to keep their costs down by buying bare bones insurance and getting just the coverage they need. are almost self-insuring to some extent unless they have a catastrophic illness. the administration would argue and does argue those who would lose their policies in this market are going to get a much better policy with better protection. now, some of the folks i talked to said, look, i'd like to make that decision. i really don't want the government making it for me. >> yeah, i understand the math behind it.
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the math behind it is that you need young, healthy people to be paying so that older people are taken care of. and older people that don't need maternity care to be paying for earn too. how it was sold, you can keep your plan if you like it, but it doesn't take into account that you're not going to be able to from a math perspective. >> what if you're not eligible for a subsidy and you wanted a $200 a month plan not a $1,000 a month plan? >> well, there are a small number of people who will be able to meet -- millions of people will be able to meet that individual grandfathering requirement. there won't be many based on what i've heard. but there will be a sliver of those who will be grandfathered. but by and large, if you have that kind of policy, you're going to have to buy something better if not today in the very near future. >> and you may have different doctors. and as you say, these are people that were going to give it, you know, that probably voted for
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the president and were positive about obama care. and now they're, you know, now they're seeing that when it affects them directly, we'll see what happens. this is not going to be a big help for a current public opinion on those in favor of or opposed to obama care, especially with the website glitches. >> joe, i think you're absolutely right when you bring up the long-term what may happen was some employer plans. that's not even factored in here. >> the other thing i was seeing. and we also -- under the impression this will really help the budget save $1 billion over ten years. i'm wondering whether we have to change some of those calculations now knowing that a lot of people are going to have to spend more money to keep -- or to have a plan, aren't they? isn't it going to be more expensive than we thought? or not yet? >> well, i think a lot of experts have always suspected or always found it difficult to believe that you could insure that many more people and actually reduce the overall costs to the government.
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long-term. but we can't tell how that's going to play out. if we're able to bend the curve on health care costs, you know, maybe what the administration projects is possible. but as you know, there are a lot of skeptics. >> okay. thank you for appearing this morning with us. we appreciate it. >> you bet. nice to be with you guys. >> great to be with you. thank you. just a month ago, fed taper talk dominated the markets, but how things have changed in just a month's time. steve liesman with the latest cnbc fed survey. and is taper ever going to happen according to what these people think, steve? >> yes, eventually. but far off into next year, becky. this is a big change in our survey here. as we do every month when we do this, we have the september on the top and the last survey and this is the new survey. let's start off with when the taper's going to happen. the average before in the prior survey, october, sorry was november 2013. now take a look, all the way over here from the right. april is now the average month for when the market believes
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taper will begin. however, let's move on now, when will they stop qe? it had been august 2014. moving on now, you've got to go all the way to december 2014 when they believe quantitative easing will stop. moving on to when the first fed hike happened at the funds rate, still in the second quarter of 2015. no change to that, that gap between stopping qe and hiking the funds rate. let's take a step back and look at the whole thing. the taper moved ahead, stopping qe moved ahead. i don't know where exactly the market draws this information from. but ultimately what this means is the taper doesn't start until what is probably janet yellen's first meeting. so the december meeting, the january meeting, all that comes through today's meeting. no taper until then. let's take a look at what happens to the amounts of quantitative easing. now we finally got there. a cool trillion expected this year for total purchases by the
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federal reserve under quantitative easing. this is the big change here. $382 billion was the average expected for 2014, almost doubled it. now we're at $646 billion expected next year. i think that number's going to come up if the amount they're expecting next year with the length of time is out there. it'd have to be a big reduction or big taper. but that's a big change. i want to show you just the time line on this thing as we've been surveying it. what you see is this number had been very steady at that 370 number through all of our surveys and now you can see a big jump-up to 646 billion. here's some of the commentary out there. saying the jobs report, quote, virtually guarantees the fed won't taper qe until 2014. guys, i will tell you 40% of our guys don't think we start until 2015. they're saying unfortunately the economy will look similar to
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'14. guys, you can read all about the survey online, cnbc.com, it's all right there. back at 8:00, i'll come back with what the market thinks the effect of the shutdown and the debt ceiling debate had on the economy and expectations for the next debate in january and february. >> makes me think that maybe peter fisher is right. he was our guest host yesterday and suggested that the only surprise left would be if the fed actually acted sooner than people have now set up on these deadlines. >> such that the -- it's so extended out there now. it is true, becky. >> and in graphic representation, liesman, to me, it looks like tightening. >> what do you mean? >> goes down. looks like they're tightening. it's tightening. and the other thing is, steve, 8 out of 9 days the s&p's higher, i'm on board now. i want to drive that car in
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every week and say, fill her up. fill her up with gas because i don't want it to ever end. i want to run on qe. >> we have a problem of june the fed and the markets being out of sync. september again. i don't know that the market and the fed are in sync on this timetable. we could have another major disruption when the fed starts to talk again. >> we're setting ourselves up for. >> that's what i'm concerned about. >> thank you. talk to you later. still to come this morning on "squawk box," halloween may be days away, but it is really christmas that the nation's retailers are worried about right now. holiday outlook from the ceo of walmart u.s. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people, making lots and lots of things. let's get your business rolling now, everybody sing. ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪
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welcome back, everyone. according to the national retail federation, 40% of u.s. shoppers say they have already begun shopping for the holiday season. our courtney reagan with a special guest on the retail front lines. courtney? >> that's exactly right. good morning to you, becky, i am here in new york city, joined by walmart u.s. ceo bill simon.
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thank you so much for being with us here today, bill. you have a big announcement to make. walmart has made a number of announcements involving associate initiatives and programs over the past year. certainly labor has been in the headlines, media, main street, protest, you're no stranger to talking about it. what's the announcement you're making today. >> thank you for having me, by the way. it's terrific to be with you. this is an interesting company, walmart is a place where career progression is important to us. and it's a company of opportunity. so today we're out and celebrating the promotions of our associates. in any year, and this year in particular, we're going to promote over 160,000 people. and as we start to get ready to, you know, kick off the holiday selling season. i'm glad to hear a lot of people have already shopped. it's terrific. we're out in 16 cities around the country making promotions for our associates. these are on the spot promotions, but they're not kind of like winning the lottery. they're well-earned, well-deserved, gone through the process. and i get the privilege of showing up today and letting
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them know they're being promoted. >> why now? you also were hiring 55,000 seasonal associates. you're right at the end of the year. obama care to think about too. why are you making these announcements now? is it correcting past mistakes? what's it about? >> no, at the beginning of the year, i made a speech at the national federal retail federation. and the importance of our jobs and this year we're going to be out and talking and defending our jobs. we're proud of what we offer. we're proud of the opportunity that we provide our associates the opportunity to start and join our company really at any career point in their life whether it be, you know, as a teenager or a senior citizen and the opportunity to progress. and with the promotions that are available, over 400 promotions a day, we just want to get out and celebrate. we hear from our associates a lot and they ask us, you know, to get out there and defend their jobs and that's what we're doing. we're talking about it and celebrating their success. >> there's a lot of them.
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over 1.3 million jobs in the u.s. with just walmart alone. >> that's right. >> if we could talk a little bit about the consumer, walmart is the world's largest retailer here and in the united states. you have a very good cross section of consumers, albeit, many of the lower income. how do you think they feel about what happened in washington with the shutdown? did that impact consumer sentiment and confidence? and what happens if we go through this all over again in january and february? >> you know, i continue to be amazed and impressed by the resilience of the customer and consumer, despite the uncertainty that's in the economy. they figure out how to adapt and adjust and support their families. and that's encouraging. they do hear and they do understand for the most part what's happening in washington and they're not happy about it. that sort of level of conversation and combativeness in washington creates uncertainty in the economy and from a consumer's perspective as well as a business perspective, certainty is very important and will free up the -- their
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thinking for the holiday season. so we were pleased that at least for the time being things were settled and the government was back and operating and hopefully we'll have a great holiday selling season and hopefully washington will get it solved after the first of the year. >> you used that word resilient, does that mean sales were not impacted by consumers being concerned? >> sales, you know, we could tell. we could tell particularly, you know, around military bases and around the, you know, the areas that have heavy government employment. also, you know, you sort of see this general lack of confidence in the economy during the shutdown. and so we're pleased that the government's back up and running. we think it's going to be good for the holiday. >> if we can talk a little bit about the holiday and programs you've announced. couple trade-in programs with the smartphones and tablets. what are you able to tell us about the success of the program or those programs or what it tells you about what the consumer's feeling about holiday
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spending? >> mobile devices are as hot as they can be and a trade-in program has allowed customers the opportunity to trade up. and they've been excited about it and taking great advantage of it. the holiday selling season is really an exciting time as we were talking about in retail. it's sort of the super bowl in our teams around the country are geared up for it. we bought deep for the holiday selling season. black friday's going to be an exciting time and we're going to have some really great pricing, best pricing of the season and it'll be the best black friday ever. >> all right. i believe becky has a question for you. >> courtney, thank you. we've been watching prices at the pump at the gasoline pump come down pretty substantially. and i just wonder how immediately that shows up in your sales and what kind of an impact? if gasoline comes down by 20 cents, what does that mean for walmart? >> typically we see the customer respond to gas prices. gas prices and employment are two are the most important correlated factors. this one's a little different. with the tail end of gas prices
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offset by the head winds of the payroll tax change at the beginning of the year, the upcoming snap benefits changes on the first of november, i think it remains to be seen how it's going to impact our sales. >> it's not something showing up in sales to this point? >> hard to say. we have our earnings release coming up in a couple of weeks, really can't get into the details of it. >> okay. thank you very much. >> my pleasure. >> thank you so much for joining us, mr. simon. really appreciate you being with us. and i'm sure we're going to tap into you again as we approach christmas. >> appreciate it. >> thank you. up next, nbc reporting that despite the president's reassurance that americans -- i guess it was an assurance initially and then it became a reassurance like a dozen times. people who like their health insurance would be able to keep it. the administration didn't know as long as three years ago that wouldn't be the case.
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plus, where congress is on the budget perhaps more importantly with mr. van hollen. we'll be right back. did the government shutdown and debt ceiling debacle leave a bad taste in your mouth? we're asking corporate america, investors and political thinkers what washington needs to do to avoid another debt debacle. can a grand bargain be reached? or are we headed for another debt ceiling doomsday? daily analysis and fresh ideas starting at 6:00 a.m. eastern time daily. watch "squawk box" and tell washington to rise above and win us back. only on cnbc. bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools
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cme group: how the world advances. the house and the senate are meeting this week on the budget. meanwhile, nbc news says the obama administration knew that obama care would force people out of their current coverage. joining us now, congressman chris van hollen, ranking member of the house budget committee. it's -- chris, it's a huge undertaking. and, you know, i know that with the best of intentions, all these things were possible when you try and do something like this. you weren't around either. i don't remember when lbj introduced a lot of the
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programs, but they had to have growing pains too. medicare part -- the prescription drug, that had some pains too. but they all seem to be happening at once. the glitch and now this. this seems even worse than normal. would you characterize it otherwise? >> are you talking about the rollout of the exchanges? or are you talking about the most recent nbc report? are you talking about the whole thing? >> that's my point. that's the problem. pick your problem. >> well -- >> pick your poison. >> well, a couple things. first of all, as you know, a lot of the affordable care act was already in place before october 1st. all the provisions that helped protect, preexisting conditions, also helps seniors on medicare. those are in place, they're working very, very well. in terms of the rollout of the exchange, people have been very clear, it's unacceptable in terms of the problem that had been encountered. our focus is to get to the bottom of this as quickly as possible so that we can make sure people can access this
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product. and i do think the fact that over 20 million americans have visited the website is a clear indication that there's a huge demand for affordable health insurance. >> how about the latest thing that we're reporting today that you saw how many times the president said if you like your plan, your can keep it. and as long as three years ago, the administration -- the white house knew that simply wasn't true. >> you know, i haven't had a chance to dig deeply into the nbc report. the one thing i do know and understand is that the issues we're talking about are primarily, first of all, on the individual market. >> right. >> and as you know, long before the affordable care act, the individual market was a very turbulent market. you buy health policies at 12 months at a time. there is no guarantee. there was no guarantee before the affordable care act that you would be able to get the same policy, the same premiums. we all ran throughout the early 2000s about people getting those individual policies in huge price spikes. so first of all, that market,
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there's never been a guarantee that you're going to get a product. secondly, it is the case that as a result of the affordable care act, there are some minimum standards that apply to the kind of policies that can be offered on the individual market and others. and some of the policies that had been offered no longer qualify. and i will say and i think you know this, many folks who bought those earlier policies later found out they didn't provide any of the coverage that they thought they had, which is why those consumer protections were put in place. and the last point i would make is about half of those folks who were getting those policy changes on the individual market will, in fact, qualify for the tax credits and therefore their overall costs will be no higher. >> you're not familiar with the report and haven't dug deeply into it, but four perfect points refuting the report. i love you guys. i know when you come on that you're sandbagging. >> no, no, i read the story, but
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i haven't had my guys dig into it yet. >> you totally refuted -- >> i guess, congressman, you were right on all of those points. but you're still talking about not a few isolated incidences. people not only going to get tossed off but end up paying more. talking about millions of people, not a few isolated incidences. you're right, not all the coverage was there before, but if it didn't offer something like maternity care and you're a 62-year-old, that's probably not huge -- not a huge thing that makes yo u feel good about thes issues. if you're going from $200 to 1,200 a month. >> no, one of the ways you allow coverage for people with pre-existing conditions, you get everybody in the pool. that means older people and younger people. and it is the case as a result of that, there are going to be some people who are paying a little bit more. but the whole purpose of the tax credits was to help smooth that impact. >> right. let's talk.
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anything going on between now and like three months from now? i mean, can you -- have you talked to anyone? are you -- what's going to happen? i've got some ideas for you. will you call me? >> you know, i will do that. >> i think you guys should do some corporate tax reform. the president said he would do that before. why don't we get together on that? that's not even -- don't even. we'll do entitlements eventually, but just for jobs, just for jobs. let's do corporate tax reform where it gets a little bit easier and maybe free up some of the money that the corporations have. will you do that for me? >> sure. >> i would like to do corporate tax reform. the question there is whether you can really do corporate tax reform in this relatively short period of time. you may be able to, at least, set up the parameters for the conversation. and that would be progress if people could agree on a framework for corporate tax reform. >> anything going on, chris?
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have you talked to -- it's not going to -- i really don't think there's any appetite for it on the right at this point to -- i think they want to get something done with you guys. this is an opportunity. >> i think it is an opportunity. and as to whether anything's happened, there have been some conversations. the first formal meeting of the conference committee will be tomorrow. my guess ask that will be primarily people offering their own perspectives on the budget and the way forward. and it will be after that that people really sit down and begin the negotiations. look, i do hope that we can find a way to at least take some, you know, small/medium steps forward to at least instill a little bit more confidence. you talked earlier with some folks about the uncertainty that's out there in the country and the economy. and i would hope that at the very least we put down the clubs and the threats of government shutdown and default and try to make some progress in some of
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these areas. corporate tax reform is an area that i'm certainly open to discussion. >> yeah. and we've got to go, chris. but you've got the right doesn't want the defense cuts and the sequester. there's room to maneuver. but we've got to go. so you just say it was my idea when you bring -- >> give me a call. we'll talk. >> all right. thank you, congressman. appreciate it. >> thank you. when we come back, apple earnings are in focus. what the tech giant is saying about sale trends, the holiday season and much more. we'll ask an analyst what he's expecting. "squawk box" will be right back. . no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab.
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apple's profits and margins sliding in the quarter. we'll talk to an analyst about the challenges for apple in the coming holiday season. seat upgrades and charges are on track to bring in record revenue this year. >> i'm a person who has feelings and all i have to do is do what i want to do and all i want to do is hold on to my bag and not listen to you. >> how your travel dollars are being spent. remember this? >> if you've got health insurance, you like your doctor, you like your plan, you can keep your doctor, you can keep your plan. >> if you like your doctor or health care plan, you can keep it. >> nbc's lisa myers is reporting that the obama administration has known for three years that millions of americans would receive cancellation letters under the new health law. plus, breaking data on the consumer and inflation, the third hour of "squawk box" begins right now. ♪
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welcome back to "squawk box" on cnbc. andrew ross sorkin is off today and in his chair our guest host david darst, chief investment strategist at morgan stanley wealth management. more from david still ahead. he brought me a halloween gift, a gourd that i've named al gourd. and it's got a dog on it, which he tells me is the -- actually the dog is coming towards me. >> it's a dog coming towards you. >> i thought the dog was leaving. but anyway, and there is lucky, carl quintanilla's dog. i know what you're thinking, but it's okay, it's a small apartment. there's a reason. >> sweet puppy. >> it's closer to a rodent than a dog. i have a designer dog too, but i
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have a german shepherd that weighs 100 pounds also to offset the little designer dog. >> all right. all right. nbc news is reporting that millions of americans won't be able to keep their current health care plan under the affordable care act and that the obama administration has known about it for more than three years. the law enforces standards for insurers that many existing policies don't meet and consumers with those plans will have to buy new ones. the white house says those numbers reflect normal turnover in the insurance market that is not caused by the law. but regulations issued by the department of health and human services prevents plans that changed after march of 2010 from being grandfathered into the new system. lisa myers broke the story and spoke to us in the last hour. >> simply because of the churn that tends to take place in the individual market, that they already knew that 40% to 67% of the folks in that market were not going to be able to meet the rules for grandfathering. so they knew that a substantial
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part of the individual market could not meet the test they were laying out for being able to keep the insurance if they wanted it. now, so it's basically a marketing problem. if the president had said most of you the vast majority of you will be able to keep your insurance if you want it, he'd be fine. but he's been saying you can keep your insurance if you like it no matter what, period. >> we will bring you more on this story throughout the day. >> see, things do change on a yearly basis. >> yeah. >> but when your policy would change before you could still have that same plan, and that's why they're being a little bit disingenuous here -- >> you can choose whether to take the premium or lower -- >> but you were grandfathered if there wasn't something happening every year. but they knew it was going to happen every year and you're no longer grandfathered and you're out. out of that plan. you know, at this point they
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should come clean. >> the president started making that promise back in devine. it wasn't until 2010 that the changes were put in. he was still making the promise three years later. anyway, some news on sears this morning. company's considering separating two of the businesses. lands end and sears auto center. the retailer says the two could optimize their structures and pursue their options as independent operations. reported a 3.7% decline for the quarter. >> revenue came in line with expectations. also raised its dividend by 5.6% plans so sell 10.6 billion in assets over the next two years.
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anticipates returning money to shareholders, as well. and aetna came in with mixed results. the earnings were 3 cents short of expectations but the revenue beat the consensus. they're citing cuts in the u.s. government funding for medicare that hurt its private medicare business. that was a similar story from both united health and from well point. across the board. >> really changed the medical loss rainbow/push whi loss ratio. it was 82.5% in the medicare business and rose to 87.8% because of medicare cuts looks like. >> yeah, and overall, medical loss ratio went from 80.1%. >> probably reflected there. yeah. yeah. okay. but medical costs were lower in its commercial business. but that didn't help. also, take a look at shares of nokia. reported a small profit. analysts had been expecting a loss and that stock's up by better than 5.5%.
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>> look at that since the last couple of months. who would've bought it at 3 or 4? >> let's get a check on the markets this morning. 8 out of 9 days the s&p's been up, the dow's indicated up again and so is the s&p. we're closing in on -- is it possible? remember 1750 seemed just no way we thought the s&p would hit 1750. a lot of the bulls had that as a price target and now we're 1762, another 3, 1765, you think we can go to 1800. >> we talked about apple earlier in the year, stock is up 30%, joe, since the low, below 400. >> you want to talk apple? >> we like apple as a big member of the s&p. >> apple slightly higher in premarket trading now after the company reported net quarterly results. we'll get the opinion after a guy who follows it.
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telecom and technology analyst at btig in new york. apple moves around a lot, walter. last night, i don't know whether you should trust people that maybe weren't -- why did they sell it? they sold it because the margin outlook looked like it was bt necessarily positive. but if you knew all the -- if you really knew what was going on, it was because of what they announced last week with some of the free software and the margin outlook was good. is that how you view it? >> you didn't know how the company was going to account for the free software. it was a change that no one knew about until they addressed it on the call. the stock sold off because the guidance for the margin wasn't as positive as some people would hope. if they gave a little more color on the call -- >> you'd hate to sell it to bottom it out yesterday based on something you didn't understand, though. maybe you shouldn't be selling right off earnings. everything else, even though earnings were down from last year and the third quarter in a
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row they were down from the previous year, still a really good report, right? >> it was still good. the ipad number was interesting because it wasn't down sequentially. what we've seen before is as products age, you see this sequential decline, they got a huge purchase from the education segment and now they have new products coming out. that should help that line better. and obviously the iphones were a little bit better than a lot of people expected. overall, a good report. >> keep asking everyone this. is it a momentum stock or a value stock? >> for me, it's whatever term you want to put on it. if they can give more evidence they can actually return to growth in 2014, it's going to catch buyers. i guess that might be more of a value stock than anything. but at, you know, less than 12 times earnings and the expectation has now risen. ever since this 5c and 5s launch, negative about the 5c, positive about the 5s, but the earnings estimate has gone up a dollar since the products were
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announced. that should get a higher multiple. >> yeah, hard to get -- it's hard to be both a value and a growth stock, i guess. because if this company starts growing again, if it starts having higher earnings year after year, the multi -- it's going to be just with ha below market multiple, it's going to be a $1 trillion stock. >> listen, six months ago, people thought they were never going to hit the 2012 earnings they hit at $44. and frankly, even the consensus number doesn't have them getting back to that number. but i think you're right that if they can show that they can grow this behemoth of a company at 10%, next year and the following year, you're going to get -- you're going to see a much higher valuation on this no matter what that absolute number becomes. >> right. but this multiple could stay where it is. and it would still be at $700, $800. and if they get multiple expansion with their peers, you know, but nothing grows to the moon. i think that's implicit in the
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way the stock trades is people think there's got to be something on the horizon because no stock has gone to $1 trillion. >> well, it is also a tech company. i think a lot of times people, you have to put the valuation in perspective. verizon, their customers pay them every month. apple's got to go out every day and sell a product. >> and they're circling, the competitors are circling too. >> we've seen this before. if you've done this a while, you've seen a story with motorola in the early days and nokia. you know, companies in tech have been unbeatable and then they are beatable. so you can't necessarily get a premium multiple, i think, but higher relative to the growth. >> i remember. novell, cisco, microsoft, they all were unbeatable. >> a lot of times people like to say this time is different. but we were hearing nokia in the '90s and it wasn't different then. >> don't forget the stock buyback. they're engaged in the largest stock buyback in history right now, joe. $60 billion, okay.
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and also, our friends carl icahn is agitating them to jack that up to 150. you've seen the share count from earlier this year from 947 million shares, down to 909 now. that reinforces the value part of this story. >> thank you. >> thank you. >> and david with us until 9:00. the fomc kicking off a two-day policy meeting today. more on the cnbc exclusive survey sees things heading. >> we'll bring you inside the room all little bit at the fed. one of the things we know they'll be talking about. what effect did the shutdown and debt ceiling discussion have on growth. and our fed survey 40 economist strategists polled around wall street saying 80% say growth is lower due to the government shutdown and the debt ceiling debate. but maybe not by so much. about a third of a point. our respondents saying they lowered their fourth quarter growth forecast by 0.3% because of the fiscal debate.
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no change at all to 2014, and actually, a slight positive really a zero for the second quarter. interesting how this came about. we asked people, what is the source of that negative impact. and what you see here is 53% say for the fourth quarter it's from a rise in uncertainty and 71% say it's uncertainty in the first quarter if there's any negative impact at all. how about the next budget battle? this survey picked up increasing concern on wall street. now you can see again a little complacency going on. 67% saying the next budget battle, the one we're going to get in january and in february will be less contentious than the one we just had. we'll keep monitoring this and see if that concern rises. they did pick up what was going to happen a month or two before it actually did. let's move on now and look -- this chart has three stories in it. i want to walk you through the three stories.
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back here in january, 80% say the u.s. needs a deficit plan now. move along here. that came down in the summertime. only 40% say, 52% say, you know what, we can take our time on this. now look again, it's come back up, more than half saying we need to have a deficit plan now. i don't know if that goes along with the debate in washington right now or if there's legitimately more concern on wall street over the deficit. but it's something we have to watch. this is where this current state of anxiety is on wall street with the nation's debt issue. let's see what they say about this. diane suanne says brinksmanship has cost us in ways we will not know for years to come economically and geopolitically. certainly on wall street they're asking for a little more certainty out of the fiscal debate. becky, read all about this online, cnbc.com. coming up at 10:00, we're going to talk about what the expectations are for the markets
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from these experts. and later in the day, what they think about janet yellen, hint hint, here comes the dove. back to you. >> only one "s" in brinksmanship. >> what's that? >> was there are more than one? >> no, you pronounce it with more than one. >> brinksmanship. >> oh, you don't pronounce the second "s." >> there's only one -- >> appreciate that correction on national television. >> are we still on? i would never look to -- coming up -- >> brinksmanship. >> brinkmanship. there's only one "s." >> it's probably right. global bank ubs reporting, ubs reporting quarterly results this morning. we're going to have the company's cfo on. it's bmo -- no, he will join us next to talk about the quarter
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first on cnbc. >> there is -- >> no. >> the first one is brinkmanship -- >> don't go to -- no, no. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ build! we're investing big to keep our country in the lead. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all around the globe. cars and parts, fuel and steel, peas and rice, hey that's nice! ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪
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ubs reported improved third quarter profits earlier today, although the shares have been down on news of a probe by authorities over the possible manipulation of foreign exchange markets. in addition, regulators are requiring the bank to hold more capital in anticipation of further unknown litigation. and that is definitely wearing today. joining us now is tom narital. and tom, this issue of having to hold more money for potential legal write-downs. how big of a problem is that going to be? how much do you anticipate you'll need to hold back? >> well, becky, you know, we've over the course of the past year since we announced our new strategy for the bank, we've been focused on reducing our risk-weighted assets, building our capital ratio. so we end the third quarter as the best capitalized bank in the world.
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so we look at this temporary rw add on as just a speed bump for us as our progress toward total shareholder returns. >> but it does mean you're not going to meet your profit goals for 2015. this is something that could have a long-term drag? >> so on the 2015 roe target, roe target of 15% is one of the highest in the banking industry. and we've said as a result of this temporary add on, if it's not completely reduced, it would push the achievement out by at least a year. >> when it comes to legal issues, it's banks around the globe that are concerned about what's happening. we've obviously seen some big agreements that have taken place with some of the major banks in the u.s. from jpmorgan, bank of america and other settlements that have gone through. how difficult is it to kind of see through the future when you're worried about all these issues coming up when it comes to settlements for these things?
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>> well, becky, it certainly is an industry issue. it's hard to talk about bank and earnings today without also mentioning litigation risk. in terms of our approach to it, we've been highlighting for some quarters now that we expect litigation expenses to be elevated for us at least through the end of 2013. we added to that today to say that we think those expenses will remain elevated through the end of 2014. but at the same time, i'd note that today we reiterated our capital targets. we believe we've got very good momentum in all of our key businesses. and in particular, if you look at our wealth management businesses who have had an outstanding year. >> the supervisory risk assessment process as you know begins right here at the beginning of november by the european banking authority. and then you get the asset quality review, aqr and then the stress tests.
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how do you -- for 128 european banks, how do you expect that process to play out for your own institution as well as other institutions across europe? >> so the eba's aqr didn't apply to switzerland as we're not a member of the eu. we've been highlighting in our outlook statement, in terms of sentiment has been concerns about structural issues and the european economy, the u.s. fiscal situation, but also the european banking system and concerns about capital. so the aqr review is a necessary step in order to help investors get more comfortable with the capitalization of banks. and no doubt we'll see some increases to capital as a result of that review. >> tom, let's talk a little bit about tapering and what that's done to the volatility and the
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markets and what in turn has meant for business. the third quarter was the period where we had everyone anticipating there was going to be a taper. people have completely changed their minds since then. the expectation is now that they won't taper until march or april of next year. so what has that meant just for volatility in the markets? what's that mean? >> well, if we look at the tapering discussion in the last quarter in the third quarter, it certainly affected our results. 8. although the outcome wasn't what everyone expected, it was spent talking about tapering. and that had an effect on markets most particularly in the emerging markets. it hit emerging markets currencies, emerging markets equity markets. and that caused substantial amount of deleveraging and reduction in client activity. we saw those results in asia where we were down on gross margin. as you look at the start of the fourth quarter, you have a
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similar effect where you started the fourth quarter talking about the event that never came. but it was the discussion about a potential default in the u.s. if you talk about that for a the few weeks, no doubt that has an impact on what clients think, how investors behave and activity levels as a result. >> tom, we want to thank you for joining us today. appreciate talking to you. >> i thought tom was very thoughtful today. >> there's a three-second delay. >> he considered every answer. it's good to see you. instead of just -- shooting from the hip. >> right, no, it's a three-second delay. >> that was a watson come here i need you moment. >> all right. coming up, breaking government data on inflation and the consumer. ppi and retail sales are going to hit the tape at 8:30 a.m. eastern. (vo) our new planes don't fly any faster.
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market research group forrester, a survey concludes that facebook concludes less business value than business marketing opportunity. facebook responded that the report was illogical and irresponsible.
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when we come back, we've got breaking economic numbers. we'll get september retail sales and ppi numbers delayed by the government shutdown. right now as we head to a break, take a look at the u.s. equity futures. dow futures up by about 35 points above fair value. we'll be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities.
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welcome back to "squawk box." we're seconds away from the retail sales and the producer price numbers that were delayed by the shutdown. rick santelli has them both. rick? >> september retail sales, headline down .1%. but strip out autos, it pops up to the expected level of up .4%. pop out autos and gas, it remains at .4%. so the data on headline looks weaker than it is, it matched expectations and it's multiples of what we were looking at with regard to august. ppi, month over month, september, down .1%, as well. when was the last time retail sales and headline ppi had the same headline number. this should be expected. but now if you strip out the all-important food and energy, up .1%.
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so there's going to be volatility. if we look at year-over-year numbers, year-over-year on headline, that is a fraction of the 1.4 we looked at for august. 1.2 year-over-year, .1% hotter than august and matched expectation. so i guess if i had to summarize, you know, think weak dollar and still some commodity prices going down, i think somewhere in the supply chain we're getting a handle on that. retail sales could have been worse. not bad, especially considering that it wasn't all attributed to autos, just like the durable number was mostly all attributable to airplanes. back to you. >> a lot going on, rick, i don't want to get you started. but did you see this brett stevens piece in the journal? you haven't? get a copy. >> no, i have. >> oh, you have? >> yes. >> you know what's weird, it's not the "wall street journal," the quotes are from the washington post, the "new york times," it's really unbelievable. most of them are from the "new
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york times" and the washington post. i heard that, it scared the heck out of me. for more -- >> joe, joe, you know, i think that halloween this year should be downgraded a bit because, of course, many of the viewers and listeners on satellite radio that watch us, they're getting, you know, i think trick and treated depending on which side of the aisle you're on every day. >> steve liesman is here and this is what's it's come to. because there were two brinks, there was the government shutdown brink and there was the debt ceiling brink. so there were brinks. >> yeah. >> brinks. >> therefore -- >> you are the -- >> i'm struggling. i'm clutching at straws. >> brinksmanship, because there were two brinks. >> at least two brinks. there was a brink in 2011. anyway -- >> we need a new word. >> talk about retail sales. one is this 2.2% decline in motor vehicle sales that has something to do with the timing
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of labor day pulling stuff into august. so the idea is that the car business is doing well. and i don't think this is going to continue the idea of a 2.2% decline in auto sales. that should bounce back. one other thing that i really like, the 0.7% gain in electronics appliances. >> say that again -- >> a 0.7% increase in electronics and appliances. electronics and appliances. >> iphone. >> apple, iphone. they have a tendency to affect the macro data. they come in -- they do an ipad, they do this, that was the expectation among economists. seems like it's there. a 1% increase in grocery store sales. i don't know what's up with that. maybe a lot of barbecuing going on over the labor day. i don't know. 0.9% decline, department store sales, a quick word on ppi which is there ain't no inflation in the pipeline, there isn't any inflation in the pipeline. >> you're butchering the
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conventional language. >> every time i talk. but when you go up the chain of production, intermediate goods, a 0.1% increase, that's less of a find, go all the way to crude goods, the least refined products. a 1% decline in core crude goods. this is probably a decent profit story in here. i don't know if david wants to jump on this. but when producer prices, the prices that are paid by producers go down or are flat relative to consumer prices, there's margin in that. >> steven, on the retail sales headline number, we see june, july, august, september, june was .6% up, august, .2% up. and now september's minus .1% down. this to me feeds into the consumer confidence number which is so important in the holidays. >> before the shutdown. >> right. the consumer confidence fell four points last month. from 77 down to 73.
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>> it's also before we're going to get a little pop from the gasoline price decline. i saw $3.22 on my way in for regular on the palisades park way. >> we had the ceo of walmart u.s. on earlier today and asked him about that just if gas prices would help. he said it would be a tail wind but you're facing the head wind of higher payroll taxes. >> and the thing that bugs me a little bit. and i need to call the bureau of labor statistics. all these fees and stuff, i'm thinking they're smart enough to include that into the inflation indicators. >> what fees? >> airline fees, baggage fees, everything being a la carte. i wonder how comparable prices are. >> phil lebeau's going to be on -- >> i know, and that's exactly what i'm talking about. it's some $40 billion in airline fees and that's a way that prices go up. and you want to be careful that we're not having any closeted inflation. >> the number one performing
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industry group out of 100 this year is the airline stocks. they're up 71% on the year. can you believe that? followed by biotech, 65%. >> what they've been able to do is to make fees acceptable. before it was outrageous and i don't know if you've gone to -- >> they've done a lot. i mean, the capacity, you know, you can't even -- >> cut the capacity. >> you try to fly some place with six different options. one option. >> and used to be able to stretch out and not anymore. >> when you consider, apple it sort of snuck up on me. not really, though. do you see what the estimates for revenue in the quarter is? >> no. >> it's like 55 to $60 billion. >> unbelievable. >> well, no wonder it matters. we're surprised it shows up in government numbers? >> you know, remember, i got to ask that question about the haswell chip in the mac book pro? >> yeah. >> there's a real reason to have waited and now a real reason to upgrade. if you were hanging around with
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an old mac book pro, you know, they have this thing. it has eight hours of battery life compared to five. compared to five. it's a faster chip, you're going to get flash storage which is really fast. anyway, there's lots of reasons people do it. people would talk about, you know, the ipad. there's other products that are out there. and it's very cool. there's only a couple of times where a company's product or action shows up in the macro data. the big microsoft dividends have shown up in income data. and now apple sales show up. >> it's 60 billion for a quarter, divide that by three months, 58, because 19 billion or 20 billion per month. >> how do you do that? >> that means per month, 30, 2/3 of $1 billion per day is being sold of apple worldwide. you love that? $660 million. >> we've watched the stock go from 50 to 700. i guess we should've seen it. >> down to $400, to $398.
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>> but that's their big quarter, right? the $60 billion. >> but it's 130 a year. >> what's walmart going to do in christmas time? >> they do a lot but the margins are -- >> are tiny. >> much smaller. >> they have, i think, over 100. >> over 100 in the quarter? >> yeah. >> it's $400 billion per year annually. >> the fourth quarter takes a big chunk on that. >> all right. i'm supposed to -- >> did you want to talk more to rick about the "wall street journal" piece that has you so excited this morning, joe. >> it's not just the "wall street journal." it's lisa myers. it's lisa myers' piece too. no, you know what, i don't want to -- my only thing was -- when the u.s. >> it didn't -- >> i want to do tax reform. corporate tax reform. >> i believe there were certain senators who were saying millions were losing their health care and there was skepticism about that. and now lisa myers has backed up
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some of those republican senators who made those claims. >> $480 billion a year. >> the way you look at it, the way it was rewritten -- >> 40 billion -- >> but my point, lisa confirmed this. my point was you're going to see employer sponsored plans go away. >> it's more economical. >> so you weren't going to be able to keep your plan because your employer would take your plan away and put it out -- that's not even what she's talking about. >> that's the big issue is the 80% who s aus tense get their health care from their employer. >> annual revenue of $480 billion. >> and if you've got a $16 trillion gdp, that means 3 cents out of every 100 cents. 3 cents out of every dollar changes hands in a walmart. you love that? >> why would you make fun of me for -- >> i didn't make fun of you. >> you don't even know what it says. yo uh don't know what it says. >> rick is standing by. >> maybe if you read it you'd
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think it was significant if you read it. here, read it. >> three reports this morning, if you don't mind. i'll get to it but i was trying to be nice to rick. you try to be nice around here and what happens to you? boom. >> rick, see you later. >> it doesn't pay to be nice. >> see you later. coming up, if you have traveled anywhere in the last several years, you've probably paid ancillary fees. those are the baggage fees, the seat upgrades, the onboard food and at the same time fees. it all adds up to a lot of revenue. phil lebeau will be here to break down the revenues after this. by the way, on track for a new time high.
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airline fees are on track to generate a record amount of revenue this year. phil lebeau joins us with more. we all know about these fees, hard to say we love them, though. >> i think people will be surprised, becky. when you see how much the airlines are taking in worldwide this year and compare it with three years ago. that's really when we saw airline fees, ancillary revenue through things like credit card frequent flyer programs, et cetera, start to take off. look at this, back in 2010, it was just 22.6 billion worldwide. it's going to be up to 42.6 billion this year. that's according to the firm idea works and they've been tracking this over the last several years. that's a 17.9% jump this year compared to last year. and when you look just at the u.s. major airlines, they're expected to take in 14.3
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billion. here's what might surprise people. everybody focuses on the bag fees. and yes, that's a big component here, but it's not the biggest component. where the airlines are really making their money is from the frequent flier and credit card programs. they sell those miles to the credit card companies who use them to lure you in. that's 60% of the revenue, baggage is 25%, onboard seating services like you want to board before other people, that's 10% and travel services. if you want to get a rental car or vacation package, that's just 5% for the airlines. but the airlines are increasingly looking at how they can push the envelope because they realize there are people who can pay these fees. >> in terms of the other 30% passengers who are willing to pay a premium for better service, and the airlines are testing that on a continuous basis to see what the limits are there and see what new services make sense or not. >> we may not like the fees but you know who loves it, investors.
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because the airlines are profitable. record profitability this year. and that's why you take a look at the airline index, it has had a stunning year. you guys mentioned it earlier, the best performing group of stocks for any industry, it's the airlines this year. and that's because these fees are -- they're nowhere close to ending, guys, we're going to see this continue to go higher and higher. 42.6 is how much it'll be worldwide this year. >> phil, we have david here, he's our guest host today. he was looking at numbers in terms of profitability for the entire industry. >> you know, phil, according to siri -- and they back it up, they say total earnings were around 4 billion. and so if you have $40 billion of fees, that means, you know, and look, airlines are basically flying hotels. you've got capital costs and you've got labor costs, it's a tough industry. and i'm glad our airlines are profitable and healthy. however, the fees are really what's keeping them afloat,
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given this tremendous background of labor restructuring, pension restructuring and consolidation like crazy that's going on in this business just like in the legal profession which you all have been reporting on. >> it's the tight capacity, as well. joe mentioned earlier, wherever you go, you used to have several choices for the most part. i'm in chicago, you've got a number of choices in new york. try flying out of some place like cincinnati or milwaukee. you've got fewer choices in those smaller markets. and as a result, there's a set number of seats and the airlines know it so they can raise fees. and there are people who are willing to say, you know what, i'll pay $10 to get on board before somebody else because i want the overhead compartment. you are looking at them, viewing their airplanes now. how can we maximize revenue? >> i think there's one more seat per row than the set number of seats. isn't there? are they done with that yet? >> they're getting there. they're getting there. narrower seats, trying to get more seats in and they're trying to squeeze a little bit more. they're pretty close to
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capacity, but every time you say, oh, the seats can't get any narrower, listen, i fly all the time and, you know -- >> i don't envy you, my friend. >> you're a tall man too. >> yeah, he's tall and -- >> i'm scrunched in these seats and i'm little. >> he's a big boy. he's full figured. >> he is not. he's a tall man. >> thanks, joe. >> i like a manly figure, phil, right? that's not -- i'm not disparaging you, lebeau, you know that. >> my favorite is you get on early, you put your bag up there, somebody comes in after you and sees a little space and decides to push a cadillac escalade in a space for a vw, it's crazy. >> when you bring in easter eggs or something. >> and you've got to watch carol burnett on youtube. you've got to say budget flying, carol burnett, she does a schtick, it's classic from the '70s. >> you've got to use the "sh."
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i'm sorry. >> phil. >> getting away with a thing here. >> don't be afraid to say it. stocks on the move ahead of the opening bell. going to check in with jim cramer at the new york stock exchange next. tomorrow on "squawk box," the democratic governor of a red state that's having early success implementing obama care. kentucky's steve bashir will join us and the chairman and ceo of universal health services on the glitch with the health exchanges. and early read on employment in october with the adp jobs report. all starts tomorrow at 6:00 a.m. eastern. the ocean gets warmer. the peruvian anchovy harvest suffers.
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let's get down to the new york stock exchange. i keep thinking about apple, jim. the multiple is so low and the company has had three quarters of year-over-year decline in earnings per share. what if that company really does start growing earnings again, even if it's only 10% a year, and the multiple just goes up a little. will this be the first trillion dollar market cap company, jim?
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>> there was so much that was good in the quarter. almost every single headline i read did not capture the conference call, did not capture the idea that this could be a monster fourth quarter because of new products. just kind of other worldly to read the stories. when apple actually was decelerating, they all seemed to think it was pretty good. this was a breakout quarter and it wouldn't shock me to see this stock go up $100 in this quarter. >> then i was thinking who would i really never bet -- >> apple i'm still a little bit -- i don't know. the sharks circle, there's other smart companies around. apple, i feel pretty comfortable but google is the other one. isn't that company five years from now going to be still google? >> google has got a great array of product, it hasn't even started monetizing yet. when they start doing that -- these are great american companies. i think people continue to underestimate them.
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we talk about politics. how about talking about engineering. look, the public loves our products. you would not believe the satisfaction levels. and we await a second. the public has -- but wait a second. do people like the product? they're talking across purposes. they did it runs before when it was about china last time. china gets better and suddenly nobody cares about china. the analysts are always playing catch up to apple. this is going to be an apple christmas. >> now, that brings us to facebook, where there's these articles that major corporations are supposedly not getting the type of return on their advertising in facebook that they were hoping for. i think of facebook and i'm not sure i'd say the same thing about facebook as i do apple and google, though i should recuse myself, i'm not on it and don't use it. >> i've asked almost every single one of the major advertisers on facebook what they think, all the companies that are supposed to not like
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it. all of them -- to a person, both on the record and off the record say the same thing. what a great way to be able to reach a billion people worldwide. so maybe some survey said no. there's no reason for these ceos to lie to me off camera. on camera people say what they want. off camera, no, you don't understand the power of facebook. but what's the point of snowing me on facebook. why don't they say, listen, we haven't had that much ruesult. >> it took my five weeyears aro on apple, by the time i do, it's too late. >> i think a lot of companies offering products that are monitors for health. apple should be in that aggressively. they can do that for the risk, they can do that for anything. they should be more involved with health. that's the next frontier. >> instead of $150 billion on
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stock, they could spend 25 on twitter z twitter. >> they did dismiss the idea of having to do financial engineering. how about the best products in the world? the analysts are caught up in this cross margin 38.8 versus 38.3. right now apple has leap frogged everybody. maybe samsung comes back with something else, not unlike our friends at tesla, except this company has real earnings. >> all right, jim. thank you. >> still to come, we'll give our guest host the last word when "squawk box" comes right back. ready or not, the stock of the day is coming up. you're watching b"squawk box" o cnbc, first in business worldwide. so i c
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which the private exchanges for employee health benefits. on the private medicaid, he said it's going to continue to be a challenge in 2014. let's get back to our guest host for the last word. david, if you had to sum it up, what would it? >> the tenth letter of the alphabet "j," japan. and the they have equity capital of 70 billion as well. alex gore ski of johnson & johnson is a phenomenal ceo and only 20% of sales are to emerging markets. >> really quickly, why japan? >> japan is a growth story. it is a valuation story, 1.2
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times book and 4.2 times book. growth, valuation structural reform. it's the real deal. >> david, it's been a pleasure having you here. thank you for our gourd. >> this is my gourd, al gourd, is going straight in my lock box above my desk. thank you for joining us. andrew will be back tomorrow. make sure you join us, squawk on the streets next. good tuesday morning, welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer at the new york stock exchange this morning. the price gains continue, albeit more